In addition to calculating your monthly subsidy on SAVE, this calculator will help you estimate monthly payments on the SAVE repayment plan.
Because the SAVE calculation will change on July 1, 2024, to charge borrowers less for undergraduate loans, it is necessary to separate undergraduate debt from graduate debt. If you have a consolidated loan, please do your best to estimate which portion of the debt is graduate and which portion is undergraduate.
What is the Purpose of the SAVE Subsidy?
Historically, many borrowers qualified for IDR plans with monthly payments lower than the monthly interest charges on the borrower’s loans.
When this happened, IDR enrollment could mean that the balance grew considerably.
This made it harder for IDR borrowers to repay their debt, and it created the possibility of a larger tax bill if the debt was forgiven.
With the SAVE subsidy, borrowers don’t have to worry about their balances increasing.
How is the SAVE Subsidy Calculated?
This calculator works by first calculating an estimated SAVE payment and then comparing it to the expected monthly interest charges for the loans.
To understand the basics of the SAVE subsidy, check out this article that explains how it works.
Maximizing the Benefit
If you qualify for the subsidy, the Department of Education suggests making extra payments to attack the principal balance. I think many borrowers would be better off using a different strategy.
Additionally, borrowers who find ways to shelter income from IDR payments can increase their subsidy even further. My favorite strategy is to set money aside in a retirement account.